Maputo, Mozambique, November 2, 2005—The
International Finance Corporation, the private sector arm of the World
Bank Group, has signed an integrated investment and technical assistance
agreement with Spectrum Graphics Limited, a prepress design and printing
services company. This is the first such agreement through IFC’s
Mozambique SME Initiative. The investment will support the company’s
corporate initiatives, including expansion of facilities and printing capacity
to serve the local market. The financing consists of a $700,000 quasi-equity
investment and a $70,000 technical assistance loan for upgrading of financial
systems and training of marketing staff.

Founded in 1998, Spectrum Graphics is a leading printing company in Mozambique.
It designs and produces high-quality stationery, advertising, and
educational products, including HIV/AIDS education materials. The
company is owned and operated by two women entrepreneurs, Ms. Nadya Rawjee-Manji
and Ms. Nilofer Lakhani, and has a work force of nearly 60 employees.

Dimitris Tsitsiragos, IFC’s Director for Global Manufacturing and Services,
noted, “IFC’s support to this investment via the Mozambique SME Initiative
reflects our commitment to leverage investment know-how and donor support
to increase access to finance in Mozambique and other frontier markets.”

Run from IFC’s Maputo office, the Mozambique SME Initiative is an IFC
pilot program working to build a portfolio of viable client companies,
whose improved operational and financial results over the next five years
are expected to stimulate interest from new investors in the country’s
SMEs. It is the latest in a series of SME partnerships between donor
agencies and IFC, an organization whose strong implementation capacity
derives from more than 600 full-time small business development specialists
in the field worldwide and a Washington-based headquarters staff with expertise
in business and finance as well as development. Along with IFC, the Swiss
and Finnish governments are contributing resources to the initiative, with
others expected to join in the near future.

The underlying premise of the initiative is that, despite an improving
investment climate, it remains extremely difficult for local companies
in Mozambique to attract capital from private investors. Several effective
programs already serve microenterprises, the most basic level of the local
private sector and the only employment option for many of the poor. But
there are enormous unmet needs at the next level, small and medium enterprises.
These businesses can play a key role in generating tax revenues, exporting
products, and collaborating to form competitive local industries. They
can also offer workers secure and well-paying jobs, as well as opportunities
for training, potential for career advancement, health and safety protection
in the workplace, and pension and insurance benefits. In almost every country
that has substantially reduced poverty and created a sound middle class,
the local SME sector has played a critical role.

IFC’s investments through the Mozambique SME Initiative are made on a
fully commercial basis and target existing businesses with strong growth
potential. The investments range from $100,000 to $1 million and
can be in the form of a royalty loan (quasi-equity), equity, or straight
loan. Technical assistance is an integral part of the initiative. It
consists of customized, hands-on financing to selected SMEs, with two objectives:
preparing them to qualify for direct financing from the investment program
and developing successful, sustainable business practices post-investment.

Once a portfolio of sustainable SMEs has been developed, the longer-term
goal is to develop the initiative into a self-supporting and viable investment
vehicle owned by the private sector. Additional SMEs will then benefit,
as there will be a new financial institution in a position to provide financial
services to them—and that can serve as a model for such institutions across
Africa. Local providers of consultancy services will also benefit from
the initiative, as it aims also to improve local resources for technical
assistance.

In addition to the the donor community, the investment in Spectrum Graphics
involved collaboration with the World Bank’s Private Sector Development
team and the PODE program technical assistance expertise.

Richard Ranken, IFC’s Director for Sub-Saharan Africa, noted, “The successful
commitment of the first investment through the Mozambique SME Initiative
demonstrates IFC and the World Bank’s combined emphasis on finding creative
solutions that increase access to finance for SMEs in Africa.”

The International Finance Corporation, the private sector arm of the World
Bank Group, promotes sustainable private sector investment in developing
and transition countries, helping to reduce poverty and improve people’s
lives. IFC finances private sector investments, mobilizes capital in the
international financial markets, helps clients improve social and environmental
sustainability, and provides technical assistance and advice to governments
and businesses. Its 178 member countries provide its share capital and
collectively determine its policies.

From its founding in 1956 through FY05, IFC has committed more than $49
billion of its own funds and arranged $24 billion in syndications for 3,319
companies in 140 developing countries. IFC’s worldwide committed portfolio
as of FY05 was $19.3 billion for its own account and $5.3 billion held
for participants in loan syndications. For more information, visit
www.ifc.org.